Knight Frank wealth report rates Africa’s growth potential highly

The latest Knight Frank wealth report attitudes survey indicates that the growth potential in wealth in Africa was 89 percent last year, while the predicted outlook for 2015 is at a figure of 82 percent. Africa is third on the list of continents, with North America first and Latin America at 85 percent.

It is interesting to note, says Lanice Steward, managing director of Knight Frank Residential SA, that of those asked whether any of their clients were interested in ski, vineyard or equestrian property, among wealthy Asians are interest in vineyards is high, with 40 percent from China, 43 percent from Taiwan and 31 percent from Malaysia.

There is interest in equestrian property, with 29 percent from Africa and 40 percent from the UAE. Apparently there are no Africans interested in ski property – the interest seems to come from Europeans (35 percent) and 50 percent from the USA.

The survey goes on to say: “Control of their property investments is clearly important to the wealthy – almost 80 percent of respondents said they prefer to invest directly in property, with only 12 percent choosing to use fund vehicles.

“Bricks and mortar retain their appeal for the latest generation of rich people, with 45 percent of respondents saying their younger clients were more interested in property than their parents.

“Analysing a report such as the attitude survey shows us where people are looking most for property and what they’re looking for, and what sort of market wealthy people are buying and selling in,” says Steward.

The Ivory Coast has the highest forecasted growth (at 119 percent) in billionaires in Africa, with Nigeria a close second with 90 percent, according to the report. Deon de Klerk, head of wealth and investment at Standard Bank, says that Africa has the highest growth potential in the world at the moment.

“Although Africa’s population counts for 15 percent, but delivers only 4 percent of the world’s global output, it offers great opportunities over the medium and long term,” says de Klerk.

How does this all affect South Africa?

Out of the top 40 cities in the world, which it is believed billionaires will be now be focusing on as investment areas and matter most to the world’s wealthy, Johannesburg is listed as 28th and Cape Town 36th. This survey takes into account what each city has to offer and why it is in demand.

“The prime international residential index (which takes into account the performance of property as an asset class) lists Cape Town as eighth in the world rankings (with a 13.2 percent annual growth) and Johannesburg in 19th position, (with 8.7 percent annual change). These are the only two cities in Africa to feature in the top 100, which is a very healthy indication of the property sector in South Africa. In comparison, London is listed in 32nd position with 5.1 percent growth and Buenos Aires as 99th with a -15 percent change,” says Steward.

“In comparing property prices, the survey shows that US$1 million will buy 17m² in Monaco and 204m² in Cape Town, which does make this area attractive to foreigners. However, most buyers here are still locals,” says Steward.

“The last interesting factor is what is happening in the commercial sector, where Tony Galetti of Galetti Knight Frank reports that several wine farms have been bought as trophy purchases in the Western Cape by Chinese investors, and that they are also investing heavily in industrial property.

“The wealth report reinforces what local property data services such as PropStats are indicating, that property prices are growing steadily, and that certain areas in South Africa will continue to be good property investment prospects,” says Steward.

Given the hand they were dealt, government has performed a delicate balancing act which it is hoped will serve to reignite confidence in investment in South Africa, regain our global credibility and satisfy the credit ratings agencies, says Dr Andrew Golding, chief executive of the Pam Golding Property group.

These days most buyers are using online property portals like Private Property when house hunting due to the convenience, up to date information and variety on offer. “The property portals have revolutionised the way buyers shop, but they do need to be cautious – viewing photos online is no replacement for viewing the property in person,” says Bruce Swain, CEO of Leapfrog Property Group.

Owning a home is a milestone that most South Africans aspire to. Becoming a homeowner is a step towards growing personal wealth and owning an asset that appreciates in value over time, provided of course that the correct principles are applied during the buying stage of the process, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

The suburb of Greenstone in Johannesburg east came to be over the last two decades. “In the beginning, it was literally just a hill with not so much as a shopping centre,” says Michael Levy, Property Consultant at Jawitz Properties Bedfordview. Today it has plenty shopping facilities and is fully built, boasting high-density, upmarket housing and residential estates, though still has a few pockets poised for commercial development.

Possibly one of the biggest sources of contention between landlords and tenants surrounds the rental deposit. “Most tenants rely on getting their rental deposits back when moving, so that they can use it to pay a deposit on their new home. Having it withheld or even having large amounts deducted can lead to a lot of distress,” explains Bruce Swain, CEO of Leapfrog Property Group.